Yahoo Finance 
Beware mortgages bearing free gifts
Take out a mortgage with Lloyds over the next couple of months and you’ll get a free iPad Mini to go with your home loan.
Thanks to a partnership between Lloyds, Connected World Services and Carphone Warehouse, borrowers who apply between 7th October and 27th November will receive a 16GB iPad Mini 4G, delivered to their home within days of the mortgage completing.
The offer doesn’t apply to buy-to-let, shared equity or shared ownership loans.
However, you can get an iPad Mini for less than £200, so while it sounds like a great welcome gift it’s perhaps not quite as generous as it first appears.
[Three easy ways to earn free money]
How Lloyds’ mortgages compare
You need to consider how competitive Lloyds’ mortgages are. There’s no point signing up to a mortgage that will cost you far more in the long run, for the sake of a ‘free’ gift like an iPad. So let’s take a look at how its deals compare.
Its most competitive two-year fixed rate is priced at 2.19% for buyers with a 40% deposit. It comes with a whopping £1,995 fee.
You can get a two-year fix at HSBC at 1.99% with a £999 fee. Thanks to the lower fee you’re already better off than with the Lloyds mortgage, even before you consider the smaller repayments. For more information on this HSBC mortgage, call 0808 256 1384.
If we look at Lloyds' five-year fixed rates for borrowers with a slightly smaller deposit, then there’s a rate of 3.98% on offer at 75% loan-to-value (25% deposit). This deal comes with a £995 fee.
With Tesco Bank, you can get a five-year deal at 2.99% with a 25% deposit, though the fee is more significant at £1,495. Alternatively, head to West Brom Building Society where you can bag a rate of 3.18% and a fee of just £599, a much better all-round deal.
Other lenders offering mortgage incentives
Competition in the mortgage market is pretty fierce at the moment, and lenders aren’t just competing on price. They are also looking at incentives and bonuses like the Lloyds iPad offer to try to entice borrowers.
Take TSB for example. Take out a mortgage with TSB and it will give you up to £2,500 to cover your council tax bill for the first year.
Then there’s Virgin Money, which offers up to £3,000 cashback on its Help to Buy mortgages.
In the past Halifax and TSB have offered to cover the costs of Stamp Duty for buyers too.
Worse off with a ‘free’ gift
Everyone loves getting something for free, but these incentives are anything but. You will almost always end up paying for them in the form of a higher mortgage rate.
So before you’re tempted by a free iPad or a year free of council tax, sit down and work out exactly how much the mortgage will cost you over your fixed or tracker rate term. Then use the lovemoney.com mortgage centre to see if there are any lower rate deals out there, and work out how much they would cost you.
In many cases, the difference will be enough to cover the cost of the ‘free’ gift and then some.
